Blackstone buys $820m industrial portfolio

The New York-based private equity giant has agreed to buy a 17 million-square-foot portfolio of 69 US industrial properties from Dexus Property Group on behalf of its BREP VII fund.

The Blackstone Group continues its two-year-old strategy of buying US industrial assets by purchasing a portfolio valued at $820.4 million on behalf of Blackstone Real Estate Partners (BREP) VII.

According to various media reports, Blackstone has agreed to buy a portfolio of 69 US warehouses from Dexus Property Group. The Australian investment firm received bids for the 17 million-square-foot portfolio from at least three firms, with Blackstone providing the winning offer.

Although Blackstone declined to comment, sources familiar with the situation have revealed that the New York-based private equity giant acquired the portfolio on behalf of BREP VII, the firm’s latest global real estate opportunistic fund. Sources could not reveal the price for which Blackstone paid for the properties.

Dexus has a large office, industrial and retail portfolio in Australia, but it only invests in industrial buildings in the US. The 69 properties, located in the Southeast, Mid-Atlantic, Midwest and Southwest, make up the bulk of the firm’s 23.7 million square feet of US holdings. Broken down, the portfolio includes 16 properties in Dallas; 10 in San Antonio, Texas; nine in Phoenix; nine in Baltimore; six in Cincinnati; six in Minneapolis; three in Columbus, Ohio; three in northern Virginia; three in Orlando; two in Atlanta; and two in Charlotte.

In a statement issued to the Australian Stock Exchange, Dexus said its “current strategy is to progressively concentrate the US industrial portfolio in preferred West Coast markets by selling properties located outside of those markets.” The firm is retaining its properties in four West Coast markets: the Inland Empire, Los Angeles, San Diego and Seattle. When asked for further comment, a spokeswoman for Dexus deferred to the statement. Eastdil Secured represented Dexus in the transaction. 

This acquisition is part of Blackstone’s ongoing strategy of targeting industrial properties in the US, which began in 2010 with the firm paying $901.5 million for a 23.3 million-square-foot warehouse portfolio from San Francisco-based ProLogis. Today, Blackstone owns 45 million square feet of industrial real estate, not including this new portfolio.

Last year, Blackstone entered into two back-to-back acquisition deals with distressed Australian firms. In March 2011, it was revealed that Blackstone agreed to acquire the US shopping centres of Australia’s Centro Properties Group for $9.4 billion. In April, the firm agreed to buy Valad Property Group, the Sydney-based owner of Australian office buildings and industrial properties, for A$1.80 ($1.85, €1.42) per share.